The Lazarus Company recorded the following adjustment in general journal format:
$$\begin{array} { | l | r | r | }
\hline \text { Rent Experse } & 1,200 & \
\hline \text { Prepaid Rent } & & 1,200 \
\hline
\end{array}$$
Which of the following choices accurately reflects how this event would affect the company's financial statements?
$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | }
\hline&&&&&\text { Stk. }&&&&&&\text { Stmt of }\
&\text { Asset }&=&\text { Liab. }&+&\text { Equity }&\text { Rev. }&-&\text { Exp. }&=&\text { Net Inc. }&\text { Cash Flows }\
\hline A&NA&=&+&+&-&NA&-&+&=&-&+OA\
\hline B&-&=&NA&+&-&NA&-&+&=&-&-OA\
\hline C&-&=&NA&+&-&NA&-&+&=&-&NA\
\hline D&NA&=&-&+&+&NA&-&+&=&-&-IA\
\hline
\end{array}$

Question

The Lazarus Company recorded the following adjustment in general journal format:
$$\begin{array} { | l | r | r | } 
\hline \text { Rent Experse } & 1,200 & \
\hline \text { Prepaid Rent } & & 1,200 \
\hline
\end{array}$$
Which of the following choices accurately reflects how this event would affect the company's financial statements?
$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | } 
\hline&&&&&\text { Stk. }&&&&&&\text { Stmt of }\
 &\text { Asset }&=&\text { Liab. }&+&\text { Equity }&\text { Rev. }&-&\text { Exp. }&=&\text { Net Inc. }&\text { Cash Flows }\
\hline A&NA&=&+&+&-&NA&-&+&=&-&+OA\
\hline B&-&=&NA&+&-&NA&-&+&=&-&-OA\
\hline C&-&=&NA&+&-&NA&-&+&=&-&NA\
\hline D&NA&=&-&+&+&NA&-&+&=&-&-IA\
\hline
\end{array}$

Quizplus · Accepted Answer

The adjustment decreases assets (Prepaid Rent) and increases expenses (Rent Expense), which decreases net income. There is no impact on liabilities, and cash flows are not affected by this non-cash adjustment.

The Lazarus Company Recorded the Following Adjustment in General Journal Rent Experse 1,200 Prepaid Rent 1,200\begin{array} { | l | r | r | } \hline \text { Rent Experse } & 1,200 & \\\hline \text { Prepaid Rent } & & 1,200 \\\hline\end{array} Rent Experse Prepaid Rent ​1,200​1,200​​

The Lazarus Company Recorded the Following Adjustment in General Journal $\begin{array} { | l | r | r | } \hline \text { Rent Experse } & 1,200 & \\\hline \text { Prepaid Rent } & & 1,200 \\\hline\end{array}$